Transcript Slide 1

Fiscal Stimulus Package
Fiscal Stimulus Package
Ministry of Finance, Kingdom of Thailand
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Current economic situation
Fiscal Stimulus Package
Leading Indicator of economic segments showed negative trends
Real VAT revenue
% YOY
2007 GDP THB. 9.09 trillion
Real agricultural income
% YOY
16.1
3.6
12.1
9.4
0.1
2550
Q1
Q2
32.9
36.9
11.5
Q3
-0.8
Retail
Q4
2550
2551
4.1
Q1
Q2
Q3
Q4
2551
13.9%
Export
% YOY
Agriculture
8.7%
% YOY
Real estate tax revenue
29.3
12.1
10.9
14.1
22.2
11.6
Real
Estate
3.2
Construction
2550
Manufacturing
2550
Q1
Q2
Q3
Q4
2551
39.6%
-12.1
10.1%
% YOY
Industrial production
-0.8
Q1
Q2
Transport
Q1
Q2
14.9
Q3
2551
Q4
-5.6
No. of tourists
% YOY
9.4
4.7
5.8
2550
Q3
Hotels &
restaurants
11.6
8.1
2551
13.3
-3
Q4 -4.7
2550
Q1
Q2
Q3
2551
Q4
-13.1
GDP figures for 2009 have been revised down to 1% (from 4-5%) due to ongoing global and local economic slowdown
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Fiscal stimulus programs
Fiscal Stimulus Package
Main components of the government’s fiscal spending
2009
2010
2011
2012
2013
Economic stimulus package
1 Supplementary
budget THB
116.7bn
2 Tax measures
Utilize Special Financial Institutions
3 to increase credit in the system
by THB 300bn
Approved budget
4
Expedite
disbursement
of budget
State budget
THB 1.84trn
SOE investment
budget THB 308bn
Municipal investment
budget THB 366bn
5
Push forward
investment
projects
2009 multi-year commitment budget extending to 2010, 2011, 2012 and
2013 are THB 120bn, THB 50bn, THB 10bn and THB 2bn, respectively
Mega Projects plan THB 1.7trn
(Mass Transit THB 440bn, Transportation and communication THB 440bn, Energy THB 370bn)
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Economic stimulus programs
Fiscal Stimulus Package
Policy and target groups
Policy
Target
Short-term stimulus measures
 Low-income earners /
Labour workers / Farmers /
SME
 Reduce living expenses / increase purchasing power
 Widespread distribution of income and create rural employment
 Increase liquidity for businesses
– Commercial banks have liquidity but have credit concerns
– Utilize SFIs to support/guarantee lending
 Reaches the hands of people and business operators
immediately
– Utilize existing channels of disbursement for budget and loans
– Minimize usage of bureaucratic channels
 Measures to deal with layoffs and unemployment
– Re-train laid-off labor force for reemployment in desired
sectors
 Sectors which have strong
impact on GDP, with high
multiplier effect
 Sectors which remain
competitive but lack
short-tern liquidity
 Manufacturing and Export
/ Agriculture / Tourism
and Services /
Construction and Real
Estate
Medium to long-term stimulus measures
 Prepare a disciplined and sustainable 2010 budget deficit
 Ensure that approved projects proceed as planned
 Approve and start long-term projects per investment plan
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Supplementary budget
Fiscal Stimulus Package
Reduce living cost / Increase purchasing power / Distribute income and create rural employment
(THB mm)
•
One-time living cost allowance of THB 2,000 for those earning
< THB 15,000 per month
– 8.1mm Social Security fund members
– 1.3mm civil servants (including retirees)
18,970
•
Extend 5 public service subsidies program for 6 months
11,409
•
1 month training and 3 months wage subsidy
– Approx. 240,000 people
•
Free education for 15 years
– Approx. 10mm students
•
THB 600 per month stipend for community healthcare workers
– Approx. 830,000 workers
Improve standards of 2,609 health service stations
3,000
“Sufficient Economy Fund for Improvement in Quality of Life”
– Funds for 78,358 villages
15,200
Low-income earners
Households
Unemployed
Parents/Students
Healthcare
Rural communities
•
•
6,900
19,000
1,095
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Supplementary budget
Fiscal Stimulus Package
Reduce living cost / Increase purchasing power / Distribute income and create rural employment
(THB mm)
9,000
•
Old-age support payment of THB 500 per month
– Approx. 5mm people
Infrastructure
•
•
•
Rural irrigation network
Small reservoirs construction
Rural roads construction
2,000
760
1,500
Police force
•
532 public housing estate for low-ranked police force
1,808
Tourism
•
Support tourism industry
1,000
Others
•
•
•
Ministry of Commerce’s measures to reduce living expenses
Development of food industry and SMEs
Rebuilding confidence in and image of Thailand
1,000
500
325
Contingency fund
•
For emergency use or as necessary
4,091
Senior citizen
Total THB 97,558 mm
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2
Tax measures
Fiscal Stimulus Package
Reduce tax burden / stimulate spending in target sectors / encourage restructuring
•
Real estate
•
•
Payment for new residential properties is tax-deductible up to THB 300,000
(transferred in 2009)
Property-transfer fee, special business tax, and withholding tax waived
(until March 2010)
Mortgage interest expense is tax-deductible up to THB 100,000/yr (on-going)
SMEs
•
Increase minimum taxable revenue to THB 1,000,000 (from THB 60,000)
– Approx. 1,000,000 small & medium enterprises
Community
businesses
•
Increase minimum taxable revenue to THB 1,800,000 (from THB 1,200,000)
– Approx. 58,000 registered community businesses
•
Minimum investment requirement in SME for the first year is waived for
registered venture capital firms
Tax on transfer of SME shares is waived
Venture Capital
•
Tourism
•
Expenses related to domestic seminars in 2009 (including hotel rooms) are
tax-deductible at twice their actual value
Debt restructuring
•
Taxes and fees are waived for income from debt reduction or retirement,
and from transfer of assets in connection to debt restructuring (2009)
Business
reorganization
•
Taxes and fees related to transfer of partial business reorganization are
waived (2009)
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3
Special Financial Institutions
Fiscal Stimulus Package
Increase liquidity for businesses by utilizing SFIs to support and guarantee loans
Credit
(THB mm)
Government
Savings Bank
•
•
Small personal loans
Non-collateralized loans for small businesses
Bank for Agriculture
and Agricultural
Cooperatives
•
•
•
•
Rural Labour Repatriation fund
Loans to develop local communities
Support rubber prices
Increase subsidies for agriculture (currently 110,000mm)
EXIM Bank
•
Export credit insurance scheme
150,000
SME Bank
•
Soft loan to commercial banks to encourage lending
100,000
Small Business
Guarantee Corp
•
Provide partial guarantees on loans to small businesses
12,000
Government
Housing Bank
•
Mortgages and reduce interest expense
10,000
Islamic Bank
•
Loans to develop communities in the southern region
10,000
Note – THB 10bn capital injection for SFIs (SME Bank THB 2bn, EXIM Bank THB 5bn, SBGC THB3bn)
10,000
25,000
4,000
12,000
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4
Expedite disbursements
Fiscal Stimulus Package
Increase purchasing power / Distribute income & create rural employment / Increase liquidity for businesses
State budget
SOE investment budget
Municipal investment budget
THB 1.84trn
THB 308bn
THB 366bn*
Quarterly
distribution
(% of ’09 budget)
24 / 25 / 25 / 26
27 / 23 / 23 / 27
N/A
Past spending
(avg. last 3 years)
94%
70%
N/A
Actual spending
Oct 08 - Dec 08
88%
70%
N/A
Total budget
Measures to
expedite spending

Regular spending report
to the Cabinet

Responsible ministers to
monitor the spending of
related departments



Responsible ministers to
monitor the spending of
their respective SOEs
PTT, EGAT, THAI, MRT,
AOT, TOT, etc.
Accelerate budgetary
spending according to
implementation plan

Accelerate the budgetary
spending of
municipalities

Amend Ministry of
Interior’s rules on
municipal spending and
borrowing to expedite
future budget
disbursement
* Estimate from 2008 income of municipalities and average income and expenditure from past 5 years
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5
Push forward investments
Fiscal Stimulus Package
Medium to long-term stimulus measures
2009
2010E
2011E
2012E
2013
Approved budget
4
State budget
THB 1.84trn
Prepare a budget
deficit
SOE investment
SOE investment
SOE investment
SOE investment
budget THB 308bn Budget THB 355bn* Budget THB 309bn* Budget THB 257bn*
Amend rules on
Municipal inv.
budget THB 366bn municipal
spending
Mega Projects plan THB 1.7trn
(State portion = THB 1.16trn, SOE portion = THB 570bn)
Mass Transit
16,458
69,398
127,786
227,370
Airport Link
9,355
-
-
-
Transportation
46,909
82,783
72,666
-
Water resources
23,548
44,923
63,567
52,031
Education
2,643
14,159
11,240
-
Healthcare
25,030
27,996
26,563
25,905
Housing
26,437
25,753
21,408
13,415
150,380
265,012
323,229
422,204
Total
*
Amend rules on
municipal
spending
2009 multi-year commitment budget extending to 2010, 2011, 2012 and 2013 are
THB 120bn, THB 50bn, THB 10bn and THB 2bn, respectively
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State portion of
investments
Amend rules on
municipal
spending
Include SOE Mega Project portion
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Distribution of benefits
Fiscal Stimulus Package
Designed to provide even distribution of benefits
Sufficient economy fund
Living cost
allowance
Community health workers
Health service stations
Community loan
5 measures
6 months
Small personal loans
Small loan guarantees
Free
education
Mortgages
Tax incentives
for home buyers
Labour repatriation loan
Irrigation
Rural roads
Job training
Senior pension
Tax measures
Agricultural subsidies
Tourism industry
Food industry
Tax measures
1
Supplementary budget
2
Tax measures
3
Small personal loans
SME
SME loan
Export insurance
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Fiscal discipline
Fiscal Stimulus Package
Retain fiscal discipline while provide room for more stimulus if needed
2009 borrowing limit (THB mm)
Borrowing plan (THB mm)
2009 budget
Loan to finance
budget deficit
437,940(1)
Economic and
social development
loan
183,500(2)
Economic and social
development projects
(committed)
Estimated decrease in
2009 revenue
2009 Supplementary budget
249,500
29,790
132,000
116,700
621,440
Efficient cash
management
can reduce
borrowing
requirement
527,990
Remaining borrowing
capacity for Fiscal Year 09
93,450
Ratio of public debt to GDP is 42% / Ratio of annual borrowing to total budget is 15%
(1) 20% of 2009 budget including supplementary budget of THB 1,935,000mm (including supplementary budget) + 80% of THB 63,676mm loan repayment budgeted
(2) 10% of 2009 budget (excluding supplementary budget)
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Expected outcome
Fiscal Stimulus Package
Expected impact on GDP growth
Impact to GDP
1
Supplementary
budget
2
Tax measures
3
New loans
4
Government
budget
SOEs
investment
/ year
Immediate spending of THB 100bn
1.0%
Every THB 10bn of tax savings
0.06% / year
Every THB 300bn of increase lending
0.2%
/ year
Every THB 25bn of spending over estimated
investment plan
0.1%
/ year
Every THB 25bn of government spending
0.1%
/ year
Municipal
budget
5
2009 budget
Mega Projects
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Goals of the stimulus package
Fiscal Stimulus Package
Immediate action as well as laying the foundation for long-term sustainable growth
1
Push
forward
investment
projects
5
Expedite
budget
disburseme
nt
4
’09
Supplementary
Budget
2
GDP
Tax
measures
Increase lending
through use of
SFIs

Increase GDP by at least 1%

Minimum GDP growth of 2% in 2009

Unemployment between 2.0-2.5%

Create THB 12,900mm in revenue
for the State

Maintain a disciplined and sustainable
budget
3
The government will likely maintain an expansionary fiscal policy through 2010
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